Demonetisation: 500/1,000 notes not valid for deposits in small saving schemes

The finance ministry today said 500 and 1,000 rupee notes cannot be used for making deposits in small savings schemes.

“The matter was examined in the ministry and it has been decided that subscribers of small savings schemes may not be allowed to deposit old currency note of Rs 500 and Rs 1,000 in small saving schemes,” the ministry said. (Reuters)

The finance ministry today said 500 and 1,000 rupee notes cannot be used for making deposits in small savings schemes. Since the demonetisation announcement on November 8, the ministry said it has received references from banks on whether these high denomination currency notes can be deposited in accounts opened under small saving schemes.

“The matter was examined in the ministry and it has been decided that subscribers of small savings schemes may not be allowed to deposit old currency note of Rs 500 and Rs 1,000 in small saving schemes,” the ministry said.

Small saving schemes include Post Office deposits public provident fund (PPF) and Sukanya Samriddhi. Interest rate on these schemes range between 7.3-8.5 per cent.

While announcing the demonetisation, Prime Minister Narendra Modi had asked holders of such notes to deposit or exchange them in banks till December 30. RBI has also issued new Rs 500 and Rs 2,000 notes.

Till November 18, people have exchanged and deposited over Rs 5.44 lakh crore worth of now-defunct notes while banks also disbursed Rs 1.03 lakh crore over the counter and via ATMs.

The government has, however, permitted usage of such notes for key public utilities like fuel, taxes, court fees and purchases from co-operative stores.

It can also be used for purchasing rail, plane, metro rail tickets, payment at government hospitals, purchase of medicines on doctor prescription from the government and private pharmacies, LPG gas cylinders, railway catering, electricity and water bills and ASI monument entry tickets.